Monday, February 28, 2011

Defence outlay may retain trend of steady rise

SOURCE : THE HINDU

The trend of steady rise in outlay for Defence in the Union Budget is expected to continue as the Ministry exudes confidence of utilising the allocation, especially toward Capital expenditure completely.Modernisation of armed forces has been the emphasis of Defence Minister A.K. Antony, which over the past few years has seen steady induction of modern military equipment – especially for Navy and the Air Force. The Indian Army too hopes to benefit from this focussed approach, with a distinct possibility of a decision, to acquire artillery guns being taken in the coming financial year.
Last year, the Ministry got an outlay of Rs. 1,47, 344 crore of which Rs. 60,000 crore was earmarked as capital funds and the rest towards revenue expenditure. The 10 {+t} {+h} Finance Commission had recommended an increase of over eight per cent annually till 2014-15, with capital expenditure growing by around 10 expenditure. While last year the hike was about 4 per cent more than the previous financial year, the Ministry is hoping to get more hike.
In the previous years, the Ministry had attracted criticism for its inability to utilise the capital expenditure.However, this time the government is confident that it will not have to surrender any amount under this head.
Last week, Minister of State for Defence M.M. Pallam Raju said in the Rajya Sabha that the Ministry would be able to spend the amount allocated in the budget. He intervened to counter the criticism by the Opposition leader Arun Jaitley in this regard.
Even the Parliamentary Standing Committee on Defence has been critical of the Ministry. In its last report on Demands for Grants for 2010-11, it did not appreciate that substantial portion of allocation was being spent in the last quarter.
One of the factors for an increased outlay is that the Medium Multi-Role Combat Aircraft deal is expected to be finalised during 2011-12. The Indian Air Force, which plans to acquire 126 aircraft initially, has completed its assessment, while the Ministry has done the evaluations on offset obligation; it is for the government to take a decision.